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Fraud case diary: Week 3 – “Abysmal business acumen”

Fraud case diary: Week 3 – “Abysmal business acumen”

The jury in the Dunedin High Court trial of former Otago District Health Board CIO Michael Swann and businessman Kerry Harford has now heard all the evidence. Here is a roundup of the main points from the third week of the proceedings.

Fri 28 Nov

An IBM assistant support engineer tells the court that in his 20-year career he has never seen a system as large as the Otago District Health Board’s that was not under a maintenance contract, reports the Otago Daily Times.

Mon 1 Dec

The Serious Fraud Office’s investigator tells the court there is no evidence of any work having being done at the DHB to justify $17 million worth of payments, and says he found no evidence that any services were provided to justify the 198 invoices paid by the board, Radio New Zealand reports.

Tues 2 Dec

Swann’s lawyer reminds the jurors of the need to analyse the intention behind Swann’s actions, and says Swann believed the contracts Sonnford Solutions had with the board were genuine and provided value for money.

Swann cites the Otago District Health Board’s placing in the top 50 of the MIS100 – “Management Information Systems” [sic] magazine – during his time as CIO to demonstrate competence. The MIS100 ranks New Zealand organisations based on a number of metrics relating to size of IT infrastructure.

The Serious Fraud Office’s investigator tells the jury that, after looking at the Sonnford records, including a letter from Harford telling the IRD Sonnford was a broking company holding licences for computer software, he neither found anything to support that claim nor any evidence of any arrangement to provide any kind of service.

Wed 3 Dec

Swann tells the jury he considered the $16 million the board paid between 2000 and 2006 to be appropriate based on his premise that Dunedin Hospital would have handled about $2.4 billion of funds during his time as CIO and some companies invested 10 percent in IT, says the ODT. Swann claims there was no conflict of interest because the DHB’s chief executive took the view that if Swann was not a shareholder or director of any of the companies that were trading entities, then the board had no interest in what he did. However, he agrees the words “risk mitigation” and “insurance cover” did not appear in any of the contracts he signed between the board and Sonnford.

Thurs 4 Dec

Swann’s lawyer tells the jury the fact Swann’s business acumen might have been abysmal was not proof of criminal guilt. But in the closing address for the Crown the jury is told contracts and invoices clearly showed the two men acted fraudulently.

The ODT reports Swann’s lawyer telling the jury that while his client might be guilty of breaching his employment contract and delegated authority, failing to put his employer’s interests first, failing to record a conflict of interest and breaching the Income Tax Act and civil law, these did not make him guilty of criminal offences. Harford’s lawyer tells the jury it would be absurd for a person to embark on a dishonest course of conduct to defraud $17 million and only take only 10 percent for himself.

Fri 5 Dec

The judge spends 90 minutes summing up the case to the jurors and at 10.30am the jury retires to begin its deliberations.


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